2005/02/01 by Lawrence J. Christiano, Martin Eichenbaum, Charles L. Evans · 3 citations
Economics, Econometrics and Finance · Mathematics · #Monetary Policy and Economic Impact #Economic Theory and Policy #Economic theories and models #Economics #Shock (circulatory) #Inflation (cosmology) #Monetary policy #Inertia #Monetary economics #Wage #Variable (mathematics) #Capital (architecture) #Keynesian economics #Econometrics #Macroeconomics #Labour economics #Physics #Mathematics
paper · doi:10.1086/426038
openalex publication_date 2005/02/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04
We present a model embodying moderate amounts of nominal rigidities that accounts for the observed inertia in inflation and persistence in output. The key features of our model are those that prevent a sharp rise in marginal costs after an expansionary shock to monetary policy. Of these features, the most important are staggered wage contracts that have an average duration of three quarters and variable capital utilization.